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On Thursday, UBS analyst Chris Zhang adjusted the price target for Wix.com (NASDAQ:WIX) stock, reducing it to $230 from the previous $255 while still upholding a Buy rating on the company’s shares. Zhang’s analysis followed Wix’s recent financial update, which included a modest first-quarter earnings beat and a second-quarter forecast that fell short of expectations. The stock has experienced significant volatility recently, with InvestingPro data showing a 17% decline in the past week, though the company maintains a "GOOD" overall financial health score.
Despite the reduction in price target, Zhang noted that Wix has prudently reiterated its fiscal year 2025 guidance for bookings, revenue, and free cash flow amid ongoing macroeconomic uncertainties, particularly in the Business Solutions sector. According to InvestingPro data, Wix has demonstrated solid revenue growth of ~13% in the last twelve months, with analysts projecting continued profitability this year. The company’s robust gross profit margin of 68% and strong cash flows suggest resilience in its business model. The firm’s guidance for fiscal year 2025 is seen as conservative, factoring in at least a 2 percentage point cushion due to initial assumptions of a similar headwind. Current exchange rates are expected to provide a favorable tailwind for Wix’s financials in fiscal year 2025.
Zhang highlighted that the market had potentially higher expectations for an increase in guidance, but the implied foreign exchange neutral cut could set a lower bar moving forward. This adjustment might pave the way for Wix stock to rise from its current valuation, which is approximately 12 times UBS’s estimated free cash flow for 2026. This valuation could be further supported by a $400 million buyback authorization, with InvestingPro confirming management’s aggressive share repurchase strategy. InvestingPro’s Fair Value analysis suggests the stock currently presents upside potential.
Wix anticipates a modest acceleration in revenue and bookings in the second half of the year, driven by new product initiatives and the strength of customer cohorts observed year-to-date through May. The update from Wix is seen as a positive shift, reducing concerns over previously ambitious growth targets. Additionally, unaccounted potential benefits such as foreign exchange gains and pending payments from Google (NASDAQ:GOOGL) could provide upside not reflected in the guidance.
Looking ahead, Wix is preparing for a significant product launch later in the year, likely an overhaul of the core Wix Editor. The company is also considering price increases for 2026, with tests being conducted this year and into the next. The recent introduction of Wixel, a new product feature, reinforces UBS’s confidence in Wix’s ability to achieve a low-teens or higher revenue compound annual growth rate over the next three years. This outlook aligns with the company’s impressive five-year revenue CAGR of 18% and projected 13% revenue growth for the upcoming fiscal year, as reported by InvestingPro.
In other recent news, Wix.com reported first-quarter earnings that exceeded expectations, with bookings and revenue surpassing analyst predictions by 1%. Free cash flow also outperformed estimates by approximately 5%. However, the company’s second-quarter revenue fell short by 1%, and management maintained its 2025 guidance, indicating reliance on the latter half of the year for growth. Analysts from JMP, Raymond (NSE:RYMD) James, B.Riley, BofA Securities, and JPMorgan provided their perspectives, with varying price targets and ratings.
JMP analysts maintained a Market Outperform rating with a $250 price target, while Raymond James adjusted its target from $300 to $250, retaining a Strong Buy rating. B.Riley kept a Buy rating with a $240 target, and BofA Securities reduced its target to $230 while maintaining a Buy rating. JPMorgan upheld a Neutral rating with a $189 target. The analysts highlighted Wix’s advancements in AI, product launches like Wixel, and a robust partner network as positive indicators.
Despite some mixed results, Wix’s strategic initiatives, such as the introduction of AI-driven products, have shown potential for future growth. The company has also seen a 24% year-over-year increase in its partner network. Analysts noted that while macroeconomic uncertainties remain a concern, the company’s operational efficiency and product innovations could drive further financial performance.
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